Israel Strikes Iran, Gauging The Fallout

How To Eliminate The Real Risk From Geopolitical Unrest

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Table of Contents

• How To Eliminate The Real Risk From Geopolitical U …

• Don’t Just Do Something, Sit There

• Buffett’s Quiet Gold Move Could Go Public By Augus …

• Three Things To Know Before We Go…

• Mailbag

Last night, news broke that Israel had launched a full-scale attack on Iran’s nuclear facilities –  hitting dozens of targets and killing a significant chunk of Iran’s military leaders, including the head of the elite Islamic Revolutionary Guard Corps. 

In overnight futures trading, oil prices shot up by as much as 15% while the S&P 500 fell by nearly 2%. As of the first hour of normal trading this morning, the markets are reacting with relative calm. Oil futures have retreated from their overnight highs, currently trading 6% higher to around $72 per barrel for West Texas Intermediate, while the S&P 500 is down by less than 1%. 

It’s too early to determine how the situation will evolve from here. However, we don’t believe this situation should cause investors to deviate from their long-term investing strategy. History and experience tell us that trying to trade around geopolitical events is typically a losing proposition. 

The table below shows that major geopolitical events including the outbreak of wars, major terrorist attacks, and political assassinations have historically produced an average one-day dip of just 1.2% in the S&P 500. The total decline, on average, is just 5% with an average recovery time of 47 days: 

Don’t Just Do Something, Sit There

There’s a classic aphorism among great investors that says, “Don’t Just Do Something – Sit there!”